Oil and gas royalty owners and an environmental group in Pennsylvania said Monday that legislation awaiting Gov. Tom Corbett's signature seriously weakens negotiating rights for some landowners.
The National Association of Royalty Owners said last-minute changes made during the weekend to a Senate bill could allow drilling companies to use decades-old mineral leases to force current landowners to accept Marcellus Shale drilling under their property. Trevor Walczak, vice president of the association's Pennsylvania chapter, said Corbett shouldn't sign the bill in its current form, though the group normally favors oil and gas drilling.
"Let's back off and take more time'' to review the issues, Walczak said. "You can't have this language inside this bill. It takes the negotiation opportunity away'' from some mineral owners.
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The Pittsburgh Tribune-Review first reported the group's concerns.
Walczak said the impact of the bill could ultimately be similar to so-called forced pooling. That's when a drilling company can force some landowners to accept drilling if many surrounding ones have agreed to leases.
The new legislation would only apply to people with existing oil and gas leases. It would means heirs to leases signed decades ago for traditional drilling could be forced to accept horizontal shale gas drilling, which can extend thousands of feet from a well, even under land owned by neighbors, who also would be forced to accept the drilling,
Hydraulic fracturing, or fracking, has led to a booming production in Pennsylvania, and hundreds of millions of dollars in yearly royalties to leaseholders. But horizontal drilling and shale gas fracking didn't exist in Pennsylvania until about five years ago. In the past wells went straight down on a leaseholder's property, not across multiple property lines.
Walczak said his group was surprised by the final legislation since it has had good relations with legislative leaders. He said the bill is ``bad business and bad politics'' that gives too much power to energy companies.
"It's outrageous,'' said George Jugovic, an environmental attorney with Penn Future. "It's just incredibly out of touch with reality.''
Jugovic said the legislation seeks to bind landowners to decades-old leases ``whenever it benefits the company,'' instead of requiring new individual contracts for the shale gas drilling. Jugovic said the legislation could be "the first step toward pooling.''
The Marcellus Shale Coalition, an industry group, said in an email that the legislation ``provides for ongoing development of existing leases in the most efficient and environmentally sensitive manner while guaranteeing fair compensation to the landowner.''
Patrick Henderson, Corbett's energy executive, declined to comment on the bill.
Sen. Gene Yaw, the primary sponsor of the senate bill, did not immediately respond to a request for comment.